Senate Jobs Bill: Tax Incentives to Hire Unemployed, but no COBRA Subsidy Extension
Yesterday the U.S. Senate voted 70-28 to approve the Hiring Incentives to Restore Employment (HIRE) Act, a $15 billion bill aimed at creating jobs, helping small businesses, and rebuilding public infrastructure. However, the bill does not include a further extension of the current COBRA subsides for unemployed workers, nor does it increase funding for state unemployment insurance programs. Click here to read the New York Times' coverage of the HIRE Act's passage. Click here to read the full text of the HIRE Act.
The key features of the HIRE Act include:
- An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;
- A $1,000 income tax credit for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer's 2011 income tax return;
- An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
- A $2 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and
- Expanded federal aid for highway programs.
The HIRE Act now goes to the House of Representatives. Although some House Democrats have grumbled that the bill does not do enough, it is still expected to quickly pass and become law.
While the HIRE Act does not extend the COBRA subsidy or unemployment insurance, extensions of those programs are not off the table. Both of those programs are set to expire on February 28, but yesterday Senate Majority Leader Harry Reid proposed language that would extend the unemployment benefits program to April 5, 2010 and COBRA benefits to March 28, 2010. Click here to read the text of Senator Reid's proposed COBRA extension. We expect to see quick debate on Senator Reid's proposal, either as an amendment to an existing bill or a stand-alone bill, so stay tuned to the World of Work Blog to see if it passes.
Homeland Security Issues Final Supplemental "No-Match" Rule
Yesterday the Department of Homeland Security (DHS) issued a supplemental final rule regarding employers' obligations upon receiving a "no match" letter from the Social Security Administration (SSA). (A "no match" letter states that an employee's reported Social Security number appears invalid). The final rule is identical to the department's previous rule, which was blocked from implementation by a California federal district court; however, DHS said it hopes that additional explanatory material provided in the rule will address the issues raised by the court. For more information, read DHS's press release.
Under the final rule, the SSA will be required to include in all no-match letters information telling employers that they are required to resolve discrepancies or risk legal liability. The rule also provides employers with a "safe harbor" provision, which provides steps employers may take when they receive a no-match letter. DHS will not use anemployer's receipt of a no-match letter as evidence to find that it violated the law by knowingly employing unauthorized workers as long as the employer follows the safe harbor rules. For text of the final rule, click here.
The final rule will not be effective until published in the Federal Register, and even then it will not go into full effect until the federal court lifts its injunction against the rule - assuming the court is convinced the final rule is lawful. Stay tuned to the World of Work for further updates.
